Scottish Dragons’ Den flamer Duncan Bannatyne has increased his gym groups’ profit by £5.5m in the last year by focusing on maximising profits rather than expansion, according to the Telegraph.
"In 2008, what we decided to do because of the banking crisis, we decided to stop expanding and focus the group on maximising profits. Our turnover is up 2pc on 2008, so we are trading well," he said.
Bannatyne Fitness made a pre-tax profit of £8.2m, up from £2.7m in 2007. But Bannatyne didn’t receive any dividend last year and profits were retained within the company. (He said he ‘just didn’t need the money’ - not that surprising as he is reportedly worht well over £300m).
This is a stunning example of how focusing on core business in times of strife can really pay off.
Bannatyne Fitness acquired 24 Living Well fitness clubs in 2006, but rather than trying to grow too quickly last year it instead focused on integrating the new additions to the brand. It also set itself the goal of ‘improving operations’, says the Telegraph.
Looking after your loyal customers and improving what you’ve got is a great way to weather an economic storm, if you can afford it. As all around you make cutbacks that gradually wear down the level of service being passed on to the consumer, you should aim to better yourself in all ways possible. This doesn’t mean making brash investments – just making sure the standard of customer service is high, the premises are clean and everything runs smoothly can keep customers happy.
Reinvest profits, as Bannatyne did, and take as little for yourself as possible. The more you can keep in the business, the better. Don’t necessarily go making wild acquisitions or opening second branches, but remember this is a good chance to grab market share. If you can afford to a little something extra for your customers, the kick it will give them during these depressing times will be remembered long after the recession lifts.
Finally, look after your key staff. Bannatyne increased the salary of his highest paid director of Bannatyne Fitness from £158,333 to £185,731 in 2007, and if you can afford a bit of a rise, it’s well worth considering. Happy managers equal more productive teams, more innovation, and more smiles passed on the customers when all others around them are losing their heads.
Keeping the service great will keep customers loyal to you.